Sunday, February 11, 2018

the key economic release of the past week was the December report on our International Trade from the Census Bureau...the Census also released the Wholesale Trade, Sales and Inventories report for December on Friday this week, while the Bureau of Labor Statistics released the Job Openings and Labor Turnover Survey (JOLTS) for December...in addition, the Fed released the Consumer Credit Report for December, which showed that overall consumer credit, a measure of non-real estate debt, expanded by a seasonally adjusted $18.4 billion, or at a 5.8% annual rate, as non-revolving credit expanded at a 5.7% rate to $2,813.1 billion and revolving credit outstanding rose at a 6.0% rate to $1,027.9 billion...this week's major private report was the Mortgage Monitor for December (pdf) from Black Knight Financial Services, which indicated that 4.71% of US mortgages were delinquent in December, up from 4.55% in November and up from 4.42% in December a year ago, and that 0.65% of all mortgages were in the foreclosure process at the end of the month, down from 0.66% of mortgages in November and down from the 0.95% of mortgages that were in foreclosure in December a year ago...

December Trade Deficit Up 5.3% on Higher Imports of Cellphones, Drugs and Cars

our trade deficit was 5.3% higher in December as the value of both our exports and our imports increased, but our imports increased by more....the Census report on our international trade in goods and services for December indicated that our seasonally adjusted goods and services trade deficit rose by $2.7 billion to $53.1 billion in December from a revised November deficit of $50.4 billion...the value of our December exports rose by $3.5 billion to $203.4 billion on a $3.4 billion increase to $137.5 billion in our exports of goods and a $0.1 billion increase to $65.9 billion in our exports of services, while the value of our imports rose $6.2 billion to $256.5 billion on a $6.0 billion increase to $210.8 billion in our imports of goods, and a $0.3 billion increase to $45.7 billion in our imports of services...the November trade deficit was revised from the originally reported $50.5 billion to $50.4 billion, while trade figures for every prior month of 2017 were also revised, meaning that previously published quarter over quarter figures for GDP will have to be revised as well...export prices were on average 0.1% lower in December, so our real December exports would be more than the nominal value by that percentage, while import prices were 0.1% higher, meaning real imports were smaller than the nominal dollar values reported here by that percentage....

the $3.4 billion increase in our December exports of goods came by way of greater exports of industrial supplies and materials, capital goods, and foods, feeds and beverages...referencing the Full Release and Tables for December (pdf), in Exhibit 7 we find that our exports of industrial supplies and materials rose by $1,545 million to $42,812 million on a $214 million increase in our exports of organic chemicals and greater exports of energy goods including fuel oil, coal and natural gas liquids, while our exports of capital goods rose by $1,164 million to $47,443 million on a $784 million increase in our exports of civilian aircraft and a $676 million increase in our exports of industrial machines other than those itemized separately....in addition, our exports of foods, feeds and beverages rose by $448 million to $10,847 million on smaller increases in a large number of items, and our exports of other goods not categorized by end use rose by $517 million to $5,749 million....slightly offsetting the increases in those export categories, our exports of consumer goods fell by $208 million to $16,738 million on a $299 million decrease in our exports of art, antiques and other collectibles, and our exports of automotive vehicles, parts, and engines fell by $75 million to $13,416 million...

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our goods imports and shows our imports of all major end use categories increased in December, led by greater imports of consumer goods and passenger cars...our imports of consumer goods rose by $3,212 million to $55,495 million on a $1,717 million increase in our imports of cellphones and a $1,820 million increase in our imports of pharmaceutical preparations, while our imports of automotive vehicles, parts and engines rose by $1,055 million to $30,916 million on a $1,149 million increase in our imports of new and used passenger cars...in addition, our imports of industrial supplies and materials rose by $567 million to $45,308 million as our imports of organic chemicals rose by $567 million and our imports of natural gas rose by $226 million, our imports of capital goods rose by $837 million to $57,247 million on a $359 million increase in our imports of civilian aircraft and a $383 million increase in our exports of industrial machines other than those itemized separately, and our imports of foods, feeds, and beverages rose by $249 million to $11,892 million...only slightly offsetting those import increases, our imports of other goods not categorized by end use fell by $65 million to $8405 million....

in the advance report on 4th quarter GDP of two weeks ago, our December trade deficit was estimated based on the sketchy Advance Report on our International Trade in Goods which was released just before the GDP release...that report estimated that our seasonally adjusted December goods trade deficit was at $71.6 million on a Census basis, on goods exports of $137.64 billion and goods imports of $209.22 billion...this report revises that and shows that our actual Census basis goods trade deficit in December was at $72.26 billion on adjusted goods imports of $209.26 billion and adjusted goods exports of $137.0 billion...at the same time, the November goods trade deficit was revised down from that advance report by nearly $0.2 billion to $69.8 billion, and the October goods trade deficit was revised down by about $0.05 billion to $68.2 billion…those revisions from the previously published figures would suggest that the 4th quarter trade deficit in goods was roughly $0.51 billion more than was accounted for in last week's GDP report, or roughly $2.1 billion on an annualized basis, which would subtract about 0.04 percentage points from 4th quarter GDP when the 2nd estimate is released at the end of this month....

however, trade in goods for July, August, September and October, which all go into figuring the change in 4th quarter GDP, were also revised with this report as well, and since our GDP growth is a measure of the change from one quarter to the next, we'd have to adjust for changes in those months as well to get an accurate 4th quarter read...since that data was not revised or included in the advance report on trade in goods, to assess the changes to those months we need to compare the previously published trade details in the pdf for November's trade report to the revised numbers in the pdf for December's trade report....without going into too much detail or adjusting for fractional inflation factors, the total trade deficit for July was revised from $45,162 million to $45,102 million, the net trade deficit for August was revised from $44,306 million to $44,245 million, and the net trade deficit for September was revised from $44,890 million to $44,830 million...that means the trade deficit in the 3rd quarter was roughly $1.8 billion less than the figure used by the 4th GDP report, or short at a annual rate of roughly $5.4 billion, and hence the change in the trade deficit from the 3rd quarter to the 4th quarter was that much greater...those 3rd quarter revisions would thus subtract another 0.11 percentage points from the growth of 4th quarter GDP, but the relevant changes to the 3rd quarter data, which also affect 4th quarter growth, will not be applied until the annual revision to GDP is released this summer....

December Wholesale Sales Up 1.2%, Wholesale Inventories Up 0.4%

the December report on Wholesale Trade, Sales and Inventories (pdf) from the Census Bureau estimated that the seasonally adjusted value of wholesale sales was at $500.2 billion, up by 1.2 percent (±0.7 percent) from the revised November level of $494.2 billion, and 9.1 percent (±1.1 percent) above the value of wholesale sales of a year earlier...the November preliminary sales estimate was revised up by $1.8 billion from $492.4 billion, which now means November sales were 1.9 percent (±0.7 percent) more than those of October, rather than 1.5% as reported last month....wholesale sales of durable goods were up 1.0 percent (+/-0.7%) from last month and were up 10.0% from a year earlier, while wholesale sales of nondurable goods were up by 1.5 percent (+/-0.8%) from November, and were up 8.3 percent from last December, with wholesale sales of petroleum and petroleum products up 23.2%, likely on higher prices...as an intermediate activity, wholesale sales are not included in GDP except as a trade service, since they do not represent an increase in the output of the goods sold....

on the other hand, the monthly change in private wholesale inventories is a major factor in GDP, as additional goods in a warehouse or “on the shelf” represent more goods that had been produced, and the Census estimated they were valued at $612.1 billion at the end of December, 0.4 percent (±0.4 percent)* higher than the revised November level and 3.4 percent (±0.7 percent) above the valuation of last December's inventories...November's preliminary inventory estimate was revised from last month's estimate of $617.7 billion to $609.7 billion, and hence the November change in wholesale inventories was an increase of 0.4%, rather than 0.8% as reported last month.....wholesale durable goods inventories were up 0.4 percent (+/-0.4%) from November and were 4.7% higher than a year earlier, while inventories of nondurable goods were valued 0.4 percent (+/-0.7%) higher than in November and were valued 1.4% higher than last November...

in the advance report on 4th quarter GDP of two weeks ago, wholesale inventories were estimated based on the sketchy Advance Report on Wholesale and Retail Inventories which was released just before the GDP release...that report estimated that our seasonally adjusted wholesale inventories were valued at $611.45 billion at the end of December, $0.67 billion less than the $612.12 billion that this report shows...that would imply that the quarterly change in 4th quarter inventories was underestimated at a $2.7 billion annual rate, which would mean that the growth rate of 4th quarter GDP was underestimated by about 0.06 percentage points based on what this report shows...

the Job Openings and Labor Turnover Survey (JOLTS) report for December from the Bureau of Labor Statistics estimated that seasonally adjusted job openings decreased by 167,000, from 5,987,000 in November to 5,811,000 in December, after November job openings were revised 108,000 higher, from 5,879,000 to 5,987,000...December's jobs openings were still 4.9% higher than the 5,539,000 job openings reported in December a year ago, as the job opening ratio expressed as a percentage of the employed at 3.8% was down from the 3.9% logged in November, while it was up from 3.7% in December a year ago...the professional and business services sector, with a 119,000 job opening decrease to 956,000, saw the largest decrease, while the health care and social assistance sector saw job openings increase by 54,000 to 1,062,000 (see table 1 for more details)...like most BLS releases, the press release for this report is easy to understand and also refers us to the associated table for the data cited, which are linked to at the end of the release...

note on the graphs used here

in March two years ago the St Louis Fed, home to the FRED graphs, changed their graphs to an interactive format, which apparently necessitated eliminating some of the incompatible options which we had used in creating our static graphs before then...as a result, many of the FRED graphs we've included on this website previous to that date, all of which were all created and stored at the FRED site and which we'd always hyperlinked back there, were reformatted, which in many cases changed our bar graphs to line graphs, and some cases rendered them unreadable... however, you can still click the text links we've always used in referring to them to view versions of our graphs as interactive graphs on the FRED site, or in the case where an older graph has gone missing, click on the blank space where it had been in order to view it in the new format....